A recent ruling by the 11th Circuit Court of Appeals is an important one for Georgia employers and employees to note, since it may affect some potential minimum wage and overtime cases. In the new decision, the 11th Circuit decided that it would join numerous other circuits in concluding that the Fair Labor Standards Act does not prohibit employees from bringing a case that contains within it both a FLSA collective action and a state-law class action.
A decision from a federal court in Atlanta this summer became the latest in a group to reject a recently created regulation by the U.S. Department of Labor declaring tips to be the property of employees in all circumstances, regardless of whether the tips were needed to raise the employee’s pay to a level that satisfied the minimum wage. The court decided that the plain language of the Fair Labor Standards Act is clear that employers are only required to hand over tip money when they pay a base wage below the applicable minimum wage.
A recent 11th Circuit Court of Appeals case addressed the unusual question of whether an employer can go from exempt to non-exempt based upon the employer’s decision to withhold pay as part of an employment dispute. In the 11th Circuit ruling, it decided that, in this case, the employee remained exempt and could not pursue his employer for minimum wage law violations. The employee’s case was a matter for the state courts under a breach of contract cause of action, rather than a matter for a federal court under the Fair Labor Standards Act.
A late June decision by the U.S. Supreme Court not to take a case pursued by several trade association groups means that a revised regulation expanding minimum wage and overtime protections to almost two million additional home care workers will stand. The high court’s refusal to hear the case leaves intact a D.C. Circuit Court of Appeals ruling from last year that determined that the U.S. Department of Labor validly exercised its authority to create wage-and-hour regulations when it decided to redefine who is, and who is not, an exempt “companion services” worker.
A woman who previously worked as an exotic dancer at an Athens club recently launched a class action lawsuit accusing her former employer of violating the Fair Labor Standards Act. According to the former employee, the club improperly withheld wages, overtime pay, and tips by improperly classifying her as an independent contractor when she was really an employee, the Athens Banner-Herald reported on its website, OnlineAthens.com. The Athens case is the latest in a string of lawsuits in which exotic dancers have challenged the legality of the way their clubs pay them.
In the recent case, Christie Burrell danced for three years at Toppers International Showbar, a well-known club in downtown Athens. During her entire employment, the club classified Burrell and all its other dancers as independent contractors, not employees. By doing so, the club avoided some of the requirements the FLSA imposes on employers regarding the payment of employees, specifically compliance with minimum wage and overtime rules. Burrell’s action claimed that, even though the club permitted, and sometimes demanded, dancers to work 40 hours or more per week, the dancers never received wages or overtime. Instead, the only compensation the dancers at the club received was their tips. To make matters worse, the club allegedly didn’t even pay the dancers all of the tips they earned, since the club engaged in “siphoning away” part of that money “to distribute to non-tip eligible employees.”
In a unanimous decision, the Georgia Supreme Court ruled in November that home care workers who are employed by third-party service providers and perform their jobs in the homes of the employers’ clients are not exempt from the Georgia minimum wage law. The employees, who may have opened the door for similar claims from thousands of workers, argued successfully that, when one included their time traveling from one client home to another within a single work day, they received total compensation that amounted to less than $5.15 per hour.
The employer in this case was Res-Care, Inc., and its subsidiary, Southern Home Care Services. The employer was in the business of providing in-home care and personal support services. Employees might help clients bathe, go to the bathroom, dress, groom themselves, and get around their home. They also might undertake some domestic chores like washing dishes and laundry. Employees often provided care to multiple clients during a single day, and they were not paid for traveling from one home to another.
The Georgia legislature began its 2015-2016 regular session on January 12, and a controversial minimum wage bill could be up for debate in the house. House Bill 8, sponsored by Reps. Tyrone Brooks and Dewey McClain, seeks to increase the Georgia minimum wage to $15 an hour for most nonexempt employees.
The current Georgia minimum wage is $5.15 an hour, which is lower than the federal minimum wage of $7.25. Employers covered by the Fair Labor Standards Act (FLSA), a federal law, must pay the $7.25 wage. Most employers not subject to the FLSA — usually smaller entities with fewer employees — must pay the $5.15 Georgia wage. The smallest of employers may be exempt from all minimum wage laws.
The proposed legislation, if it is passed into law, also would broaden the number of employees exempted from Georgia’s minimum wage. Currently, domestic workers, farm workers, and employees who depend on tips are exempt from the law, meaning that they do not have to be paid the minimum wage. The proposed legislation would change that: Employers of domestic and farm workers would be obligated to pay the new minimum wage. For waiters and other employees who are paid gratuities the new legislation would allow tips to constitute up to 50 percent of their new $15 minimum wage.
With the economic downturn largely in America’s rearview mirror as job creation and employment continue to rise, there’s been a lot of talk about the quality of many of those new roles. Whether it’s fast food workers or retail employees, the most prominent new labor issue is not whether there are jobs to be found, but whether those jobs offer a living wage. Over the past several months, workers in minimum- and low-wage positions have made increasingly louder demands for higher pay and unionization rights through a string of walkouts and protests around the country. Perhaps a matter of serendipitous timing or the signal of a cultural shift, it seems that lawmakers and courts are giving life and validity to the movement, and employers should start taking notice.
Consider the situation at America’s biggest retailer, Walmart. For the third year in a row, Black Friday shoppers across the country were met by protests from workers and sympathizers demanding a base pay increase to $15 per hour and the right to form a union. Actually, the number of Walmart workers comprised only a small portion of the protesters, with the majority being members of other unions offering support. Whether the protesters actually represent the sentiment of all or even most Walmart workers largely depends on which side of the divide is offering an opinion, but an administrative law judge for the National Labor Relations Board (NLRB) recently sided with employees who said they were unfairly disciplined by the company for their efforts to organize workers.
The economic downturn that began in 2008 changed a lot of things about the job market. Apart from the jump in unemployment rates, may of the jobs that were available were no longer the full-time positions that traditionally served as the norm for the workforce. More roles were converted to part-time or temporary jobs that didn’t include the benefits of full-time positions. Many of these positions also came with a certain degree of instability and no guarantee of hours, while many of the temporary workers being staffed by employment agencies were ceding a significant chunk of their potential earnings to the agencies.
Emerging from this came a rise in independent contractors (“1099 workers” to the IRS), who were often completely competent employees forced out during tough times who remained un- or under-employed for long periods and decided to cut out any middleman as they did piecemeal work where they could. The system worked out well for businesses using the independent contractors, since they were not obligated to offer benefits or even pay employment taxes on the 1099 pool of labor. As long as the workers could exercise a great deal of autonomy as to how they accomplished the assigned tasks and there was some level of impermanence, everyone–including the IRS–was happy.
Much as single days celebrating mothers and fathers seem to fall short of fully acknowledging everything they do for their families, a lone Monday off in honor of America’s hard workers is far from all the reward they deserve. Of course, that shortfall is unfortunately what keeps employment law attorneys busy the other 364 days of the year. Instead of focusing on all that needs fixing to help ensure workers’ rights, however, today is a good day to reflect on some of the biggest labor wins of the past century.
By any objective standard, the Fair Labor Standards Act (FLSA) of 1938 should be near the top of victories for the working class. After decades of failed efforts to right wrongs that included excessive child labor, six-day work weeks of 10 or more hours a day, and unlivable wages, President Franklin D. Roosevelt and Congress engaged in years of back-and-forth negotiations to finally arrive at a bill that banned oppressive child labor, capped the work week at 44 hours, and set a minimum wage of 25 cents an hour–about $3.32 in 2014 dollars. (A detailed and compelling history of the FLSA can be found on the U.S. Department of Labor’s website.) While the FLSA couldn’t begin to solve all the ills faced by the labor force, and it didn’t achieve the 40-hour week or 40-cents-an-hour minimum wage that many had pushed, it cemented a huge win for workers’ rights.
Almost 80 years later, conditions for workers have generally improved. Still, access to fair, livable wages continues to dominate much of the conversation about what the labor force needs, with President Obama and labor unions using today to further their efforts to increase the federal minimum hourly wage from $7.25 to $10.10. So far, opponents have stalled any national movement on the issue, but several states and municipalities have already enacted higher minimum wages, with Seattle going so far as to raise it to $15 per hour.